The improvement of the legal system of ESG information disclosure of listed companies in China: A cost-benefit analysis path

Abstract

The number of companies disclosing ESG information among listed companies in China has been increasing year by year, but the quality of ESG reports disclosed varies, mostly with qualitative embellishment content and lack of comparability among companies, which is contrary to the original intention of the system to urge companies to fulfill their social responsibility and strengthen financial supervision to prevent financial crisis. Compared with the more mature ESG disclosure systems in foreign countries, China is still in the initial stage of exploration, and there is a controversy in the academic community as to whether or not to adopt mandatory information disclosure. Based on a cost-benefit analysis, the article argues that a mandatory information disclosure system should be adopted, with specific suggestions from both the legal level and the exchange regulatory documents, so as to transform from semi-mandatory disclosure to mandatory disclosure, with quantitative disclosure indicators for each industry, to better regulate and improve the quality of information disclosure of listed companies, and to maximize social benefits.